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SYRIZA Broken Promise Bill Whacks Greeks With 4.9B Austerity Package

Αssociated Press

FILE - Greek PM Alexis Tsipras leads government’s Cabinet, April 13, Athens. Photo: Eurokinissi/ Tatiana Bollari

ATHENS - Greece’s Parliament has begun debate on a 4.9 billion-euro ($5.38 billion) austerity plan presented by the ruling Radical Left SYRIZA-led coalition which campaigned against it.

The package was required by the country’s European creditors to get release of more monies from a third bailout of 86 billion euros ($94.49 billion) and give the government enough money to pay a 7-billion euro ($7.69 billion) loan payment in July, most of it right back to the lenders, including the International Monetary Fund which took part in two first rescue packages of 240 billion euros ($263.69 billion).

Prime Minister Alexis Tsipras, continuing to renege on his promises, agreed to hit pensioners with more cuts in 2019 and put taxes on low-income families, those he vowed to protect before surrendering to the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM).

The multi-bill contains cuts to main and supplementary pensions by up to 18 percent from 2019 and income tax hikes of up to 650 euros ($714.17) per taxpayer as of 2020, as well as new hikes to social security contributions for freelance workers and tax exemption abolitions from next year, Kathimerini reported.

The pension cuts will save the state a total of 2.7 billion euros ($2.97 billion) by 2021, while the reduction in the tax discount will fetch an extra 2.06 billion, some $2.26 billion, while a rise in contributions and the cuts to allowances will add another 143 million euros, about $157.12 million.

Among the measures is the loss of two monthly pensions as of 2019 for those on relatively high pensions, plus another 650 euros ($714.17) per year through the tax discount reduction. Taxpayers will also lose the tax discount determined by their medical expenses and the 1.5 percent discount on tax withheld from their salaries and pensions.

The newspaper said the government is trying to hide this wave of fresh austerity measures under the promise of the so-called countermeasures that could run to 7.5 billion euros ($8.24 billion) which haven’t been endorsed by the Troika.

The countermeasures though depend on Greece hitting fiscal targets, which it hasn’t been able to do yet, including reaching a primary surplus of 4.5 percent of Gross Domestic Product (GDP) which most analysts said isn’t attainable.

The cost will reach 5.396 billion euros ($5.93 billion) over the 2018-2021 period, as calculated from provisions included in a draft omnibus bill tabled in Parliament the business newspaper Naftemporiki said.

The figure, if added to the measures passed in the third memorandum negotiated and submitted to Parliament by the government in August 2015, reaches 14.048 billion euros ($15.43 billion) after Tsipras said he wouldn’t implement a single euro more..

The primary changes in the country's tax regime, as detailed in the draft legislation, include:

- Reduction of the tax-free annual income threshold, which for some castes of wage-earners and pensioners - earning less than roughly 6,000 euros a year - can reach up to 650 euros in extra taxes

- Abolition of certain tax breaks for wage-earners, pensioners and even Parliament MPs, a measure forecast to generate 233 million euros ($256 million) in revenues for state coffers in 2018

- Abolition of a heating oil subsidy for low-income households by 50 percent, which translates into 58 million euros ($63.73 million) in state budget savings for 2018 but will leave more vulnerable Greeks in the cold.

- Taxes ranging from 15 percent to 45 for short-term leasing of lodgings, essentially an "Airbnb tax"

- More and extensive tax audits beginning in 2018

- Abolition of a so-called "solidarity tax" on annual income of less than 30K euros as of 2020, and a lower rate for incomes above that figure

- A reduction, by 2 percent, of the highest income tax rate for individual taxpayers, from 22 percent to 20 percent, but as of 2020

- A reduction, as of 2020, of the corporate tax rate, from 29 to 26 percent

- A reduction in the Value Added Tax (VAT) rate for agricultural sector supplies, from 24 to 13 percent, as of July 1, 2017.